Guys, I dont have time to read notes and Gamma for me is like a blue sky.
So could you tell me key bullet notes which are commonly testable and I must know?
Like when it is negative, when positive, etc.
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Gamma’s always positive (for long positions).
It’s close to zero for far in-the-money and far out-of-the-money options.
It’s highest near the strike price, and gets higher the closer you are to expiry.
Can’t make it much simpler than that.
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Gamma is negative for short call/put.
Also know that Gamma is a second-order variable, while delta is a first-order variable.
Good point. I amended my post, above.
Gamma measures the sensitivity of Delta to price changes of the underlying